Stock prices may build on Friday’s gains today, despite prospect of a government shutdown.
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Stock prices moved up slightly Friday after ticking down for four consecutive days. Investors appear undeterred by the prospect of a government shutdown this week. Wall Street also seems to have accepted the industry-focused tariffs U.S. President Donald Trump announced last week.
Despite Friday’s positive result, the week ended with losses in three major stock indexes. The large-cap S&P 500 index was down 0.3% and the technology-focused Nasdaq Composite declined 0.7%. The Dow Jones Industrial Average, focused on blue-chip stocks, fell 0.2%.
Stock futures for the S&P 500, Nasdaq 100 and Dow Jones are up ahead of the market open on Monday. Contracts tied to the S&P 500 are up 0.6%. Nasdaq 100 futures and Dow Jones futures are up 0.4%.
Investing & Economic News To Watch Today
Economic and investing news on the calendar for Monday include:
- Speech by Fed Governor Christopher Waller. According to a Financial Times poll, economists favor Waller as Jerome Powell’s successor for the central bank chair role. The same poll indicated few think Waller will get the job, since Trump is more likely to appoint Kevin Hassett, chair of the White House’s National Economic Council. Waller will speak at the Sibos 2025 Converence in Germany on Monday.
- Carnival Corporation (CCL) earnings. The cruise line operator is expected to report $1.32 in EPS for the August quarter, up slightly from $1.27 in the prior-year quarter.
- Jefferies Financial Group (JEF) earnings. Investment bank Jefferies Financial Group has missed consensus EPS estimates for three consecutive quarters. Analysts expect $0.80 in EPS for the August quarter, up from $0.75 in the prior-year quarter.
- Vail Resorts (MTN) earnings. Resort operator MTN is expected to have lost $4.72 per share in the July quarter, after a $4.67 loss per share in the prior-year quarter. MTN operations are significantly affected by seasonality.
Today’s Trading Lesson
How do you define a “loss”—on paper or realized? How you define a loss may be impacting your trading decisions, and not in a good way.
A realized loss occurs when you sell an investment for less than you paid for it. Unrealized losses, sometimes called paper losses, happen in positions you still own that are currently worth less than you paid for them.
Permanence is a key difference between realized and unrealized losses. Your realized losses are permanent. You cannot reverse them. You can only make up for them by generating gains elsewhere in your portfolio. On other hand, unrealized losses can be temporary. With a promising bit of news or investor sentiment reversal, your downtrodden stock can rise in value and the unrealized loss can disappear—sometimes like it never happened.
If you are responding to unrealized losses as if they are permanent, you could be liquidating too soon and missing out on key recovery gains.
Differentiating Temporary Declines From Permanent Ones
When a stock price falls, take the time to decide if the change is temporary or permanent. If the factors driving the decline are temporary, you may not need make it permanent by selling. Factors that can cause a temporary stock price decline include:
- Resolvable supply chain issues
- Cyclical economic conditions
- Product recalls
- Leadership changes
- Removal from a key index, like the S&P 500
- Failed growth initiative
Fair warning: This analysis may be not clear cut. These same factors can also lead to permanent stock price declines if the leadership team cannot adjust to the new environment or correct underlying issues. You can review research notes from analysts to guide your thinking, but these may also have different viewpoints. You may need to choose your next move based on your timeline, intuition and other investing opportunities available to you.
Factors that can lead to permanent stock price declines include:
- Technological disruption or obsolescence
- Regulatory changes
- Declining market share over time
- Pattern of leadership team failures
- Fraud-related reputation damage
- Credit downgrade or bankruptcy
When a stock’s value declines in a non-recoverable way, move decisively. If the business is fundamentally less profitable, then it is also fundamentally less valuable. That’s usually when it’s time to sell and reinvest your money elsewhere.
